NEWPORT BEACH, Calif.,Nov. 10, 1998 (PRIMEZONE) -- The Presley Companies (NYSE: PDC) today reported net income for the third quarter ended September 30, 1998 of $3,299,000, or $0.06 per share, on sales of $89,509,000, as compared with a net loss of ($3,200,000), or ($0.06) per share, on sales of $68,349,000 for the comparable period a year ago. Sales of homes were $89,319,000 for the quarter ended September 30, 1998, up 32 percent from $67,583,000 for the comparable period a year ago.
For the nine months ended September 30, 1998, the Company reported net income of $1,214,000, or $0.02 per share, on sales of $236,517,000, as compared with a net loss of ($82,228,000), or ($1.58) per share, on sales of $233,710,000 for the comparable period a year ago. The net income for the nine months ended September 30, 1998 includes an extraordinary gain from retirement of debt of $522,000 after applicable income taxes. The net loss for the nine months ended September 30, 1997 included a non-cash charge of $74,000,000 as a result of the recognition of impairment losses on certain of the Company's real estate assets.
Homes sold, closed and in backlog for the Company and its unconsolidated joint ventures as of and for the periods presented are as follows:
As of and for As of and for
the Three Months the Nine Months
Ended September 30, Ended September 30,
__________________ __________________
1998 1997 1998 1997
____ ____ ____ ____
Number of homes sold
Company 507 419 1,587 1,296
Unconsolidated joint ventures 42 - 123 -
___ ___ _____ _____
549 419 1,710 1,296
___ ___ _____ _____
___ ___ _____ _____
Number of homes closed
Company 474 357 1,206 1,186
Unconsolidated joint ventures 20 - 22 -
___ ___ _____ _____
494 357 1,228 1,186
___ ___ _____ _____
___ ___ _____ _____
Backlog of homes sold but not closed
at end of period
Company 777 392 777 392
Unconsolidated joint ventures 108 - 108 -
___ ___ ___ ___
885 392 885 392
___ ___ ___ ___
___ ___ ___ ___
Net new home orders for the quarter ended September 30, 1998 increased 31 percent to 549 units from 419 a year ago. For the third quarter of 1998, net new orders decreased 12 percent to 549 from 622 units in the second quarter of 1998. The number of homes closed in the third quarter of 1998 increased 38 percent to 494 from 357 in the third quarter of 1997. The backlog of homes sold as of September 30, 1998 was 885, up 126 percent from 392 units a year earlier, and up 7 percent from 830 units at June 30, 1998.
The dollar amount of backlog of homes sold but not closed as of September 30, 1998 was $222,790,000, as compared to $81,258,000 as of September 30, 1997 and $204,409,000 as of June 30, 1998. The Company's inventory of completed and unsold homes as of September 30, 1998 has decreased by 35 percent to 26 units from 40 units as of June 30, 1998.
The improvement in net new homes orders, closings and backlog for the third quarter of 1998 as compared with the third quarter of 1997 is primarily the result of improved market conditions in substantially all of the Company's markets and additional sales locations as a result of new land acquisitions. At September 30, 1998, the Company had 47 sales locations as compared to 43 sales locations at September 30, 1997.
The Company also reported that for purposes of the Indenture governing its Senior Notes, EBITDA (earnings before interest, taxes, depreciation and amortization) was $32,963,000 for the third quarter of 1998 as compared to $24,379,000 for the third quarter of 1997. EBITDA coverage of interest incurred for the three months ended September 30, 1998 was 4.31, as compared to 3.00 for the three months ended September 30, 1997. EBITDA after development expenditures amounted to $6,557,000 for the third quarter of 1998 as compared to $2,921,000 for the third quarter of 1997.
The Presley Companies is one of the oldest and largest homebuilders in the Southwest with development communities in California, Arizona, New Mexico and Nevada. Founded in 1956, The Presley Companies has built and sold more than 45,000 homes and currently has 47 sales locations. Presley's corporate headquarters are located in Newport Beach, California.
Certain statements contained in this release that are not historical information contain forward-looking statements. The forward-looking statements involve risks and uncertainties and actual results may differ materially from those projected or implied. Further, certain forward-looking statements are based on assumptions of future events which may not prove to be accurate. Factors that may impact such forward-looking statements include, among others, changes in general economic conditions and in the markets in which the Company competes, changes in interest rates and competition.
THE PRESLEY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per common share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
__________________ _________________
1998 1997 1998 1997
____ ____ ____ ____
Sales
Homes $ 89,319 $ 67,583 $225,592 $223,234
Lots, land and other 190 766 10,925 10,476
______ ______ _______ _______
89,509 68,349 236,517 233,710
______ ______ _______ _______
Operating costs
Cost of sales - homes (75,197) (59,737) (194,194) (200,679)
Cost of sales - lots,
land and other (1,227) (913) (11,378) (9,983)
Impairment loss on
real estate assets - - - (74,000)
Sales and marketing (5,385) (5,191) (15,180) (15,826)
General and administrative (3,188) (3,686) (10,144) (12,047)
_____ _____ ______ ______
(84,997) (69,527) (230,896) (312,535)
______ ______ _______ _______
Operating income (loss) 4,512 (1,178) 5,621 (78,825)
Income from unconsolidated
joint ventures 501 - 346 -
Interest expense, net of
amounts capitalized (2,180) (2,237) (7,073) (5,001)
Other income, net 669 215 1,638 1,598
_____ _____ _____ _____
Income (loss) before income taxes and
extraordinary item 3,502 (3,200) 532 (82,228)
(Provision) credit for income taxes (203) - 160 -
_____ _____ _____ _____
Income (loss) before
extraordinary item 3,299 (3,200) 692 (82,228)
Extraordinary item - gain from
retirement of debt, net of
applicable income taxes of $363 - - 522 -
_____ _____ _____ _____
Net income (loss) $ 3,299 $ (3,200) $ 1,214 $(82,228)
_____ _____ _____ _____
_____ _____ _____ _____
Basic and diluted earnings per common share
Before extraordinary item $ 0.06 $ (0.06) $ 0.01 $ (1.58)
Extraordinary item - - 0.01 -
_____ _____ _____ _____
After extraordinary item $ 0.06 $ (0.06) $ 0.02 $ (1.58)
_____ _____ _____ _____
_____ _____ _____ _____
THE PRESLEY COMPANIES
CONSOLIDATED BALANCE SHEETS
(in thousands except number of shares and par value per share)
September 30, December 31,
1998 1997
____________ ___________
(unaudited)
ASSETS
Cash and cash equivalents $ 7,260 $ 4,569
Receivables 10,520 8,652
Real estate inventories 207,219 255,472
Investments in and advances to unconsolidated
joint ventures 23,161 7,077
Property and equipment, less accumulated
depreciation of $3,154 and $2,339 at September 30,
1998 and December 31, 1997, respectively 3,303 3,613
Deferred loan costs 4,045 3,266
Other assets 3,678 2,595
_______ _______
$259,186 $285,244
_______ _______
_______ _______
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Accounts payable $ 20,497 $ 12,854
Accrued expenses 17,427 23,136
Notes payable 65,526 74,935
121/2% Senior Notes due 2001 160,000 180,000
_______ _______
263,450 290,925
Stockholders' equity (deficit)
Common stock:
Series A common stock, par value $.01 per share;
100,000,000 shares authorized; 34,792,732
issued and outstanding at September 30, 1998
and 17,838,535 issued and outstanding at
December 31, 1997, respectively 348 178
Series B restricted voting convertible common stock,
par value $.01 per share; 50,000,000 shares
authorized; 17,402,946 shares issued and
outstanding at September 30, 1998 and
34,357,143 issued and outstanding at
December 31, 1997, respectively 174 344
Additional paid-in capital 114,802 114,599
Accumulated deficit from January 1, 1994 (119,588) (120,802)
_______ _______
(4,264) (5,681)
_______ _______
$259,186 $285,244
_______ _______
_______ _______
THE PRESLEY COMPANIES
SUPPLEMENTAL FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
The following table sets forth certain selected unaudited financial data regarding the Company's cash flow for the purposes of the Indenture governing the Company's Senior Notes:
Three Months Ended Nine Months Ended
September 30, September 30,
__________________ ________________
1998 1997 1998 1997
____ ____ ____ ____
EBIT $ 11,472 $ 5,189 $ 26,121 $ 13,564
Amortization of Non-Cash Costs to
Cost of Sales, excluding interest
amortized to cost of sales 21,202 19,012 65,698 72,082
Depreciation and amortization 289 178 811 546
______ ______ ______ ______
EBITDA $ 32,963 $ 24,379 $ 92,630 $ 86,192
______ ______ ______ ______
______ ______ ______ ______
Development expenditures:
Lot and amenity development $(14,383) $(13,818) $(35,186) $(41,284)
Land acquisitions (8,837) (7,238) (23,181) (30,144)
Net change in housing inventory (3,161) (402) (30,300) 9,135
Investment in unconsolidated
joint ventures (25) - 15,571 -
______ ______ ______ ______
Total development expenditures (26,406) (21,458) (73,096) (62,293)
______ ______ ______ ______
EBITDA after development
expenditures $ 6,557 $ 2,921 $ 19,534 $ 23,899
______ ______ ______ ______
______ ______ ______ ______
Interest expensed and amortized to
cost of sales:
Interest incurred $ 7,652 $ 8,119 $ 24,308 $ 23,566
Less capitalized interest (5,472) (5,992) (17,235) (18,865)
______ ______ ______ ______
Interest expensed 2,180 2,127 7,073 4,701
Amortization of capitalized
interest included in
cost of sales 6,392 6,187 18,196 16,142
______ ______ ______ ______
Total interest expensed and
amortized to cost
of sales $ 8,572 $ 8,314 $ 25,269 $ 20,843
______ ______ ______ ______
______ ______ ______ ______
Interest incurred $ 7,652 $ 8,119 $ 24,308 $ 23,566
______ ______ ______ ______
______ ______ ______ ______
EBITDA/Interest incurred 4.31x 3.00x 3.81x 3.66x
______ ______ ______ ______
______ ______ ______ ______
(1) The impairment loss on real estate assets was not included in calculating EBIT for 1997.
-0-
Contact: Investor Relations
W. Douglass Harris
The Presley Companies
(949) 640-6400
or
Media Relations
Stern and Co.
(310) 442-8414